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"&amp;lt;strong&amp;gt;Apple on Monday announced the best spring quarter for earnings and revenue in company history, and has just finished a financial conference call with analysts and members of the media. Several notes of interest are available from the call.&amp;lt;/strong&amp;gt;\r\n\r\n&amp;lt;vc&amp;gt;Apple said third quarter profit &amp;lt;a href=\"\"&amp;gt;rose over 31 percent&amp;lt;/a&amp;gt; to $1.07 billion, or $1.19 per diluted share for the three-month period ended June 28, 2008.\r\n\r\n&amp;lt;strong&amp;gt;Apple regional business segments&amp;lt;/strong&amp;gt;\r\n\r\nApple Americas accounted for 1,134,000 Mac shipments and $3.435B in revenues. These figures are up 38 percent and 28 percent year-over-year.  Sequentially, shipments are up 28 percent with revenue also up 5 percent.\r\n\r\nApple Europe accounted for 576,000 Mac shipments and $1.64B in revenues. Both these figures are up 47 percent and 42 percent year-over-year, but are down sequentially by 8 percent and 7 percent respectively.\r\n\r\nEurope is growing at about 4 times the average rate for the region, according to IDC statistics.\r\n\r\nApple Japan accounted for 102,000 Mac shipments and $365M in revenues. These figures have increased by 26 and 41 percent year-over-year, but are each down 14 percent sequentially.\r\n\r\nApple's Asia Pacific (and FileMaker Inc), billed as \"Other Segments,\" accounted for 208,000 Mac shipments and $571M in revenues. These figures are up significantly, by 53 percent and 44 percent compared to the same period a year ago. Sequentially, unit shipments rose 3 percent in the Asia Pacific regions while revenue dropped by the same percentage.\r\n\r\nBoth Japanese and Asia Pacific results did particularly well for Apple, with the latter growing about 2-3 times the market rate, IDC says.\r\n\r\nApple's \"Other Music Related Products and Services\" segment accounted for $819M in revenue. The figure represents a 35 percent surge year-over-year, but a 7 percent dip versus the previous quarter.\r\n\r\nApple's \"Peripherals and Other Hardware\" added $437M in revenue, representing a 42 percent surge year-over-year while maintaining a 6 percent gain sequentially..\r\n\r\nApple's \"Software, Service and Other Sales\" segment provided $501M in revenue, climbing 30 percent versus the same point in 2007 but dropping 5 percent compared to the winter.\r\n\r\nGrowth was seen in \"all regions.\"\r\n\r\n&amp;lt;strong&amp;gt;Apple's Mac business&amp;lt;/strong&amp;gt;\r\n\r\nApple sold 943,000 desktops during the quarter and 1,553,000 notebooks, which equates to spikes in shipments of 49 and 37 percent respectively.  Notebook shipments grew faster sequentially than before at 8 percent, while desktops turned around and grew 10 percent themselves.\r\n\r\nThe combined total of 2,496,000 Macs is a \"new record,\" according to company chief Steve Jobs.\r\n\r\nMacs accounted for less than half of Apple's total revenue at 48.3 percent.  Revenue in the quarter was nonetheless driven primarily by the Mac.\r\n\r\nThe company shipped the most Macs ever to higher education during a June (spring) quarter.\r\n\r\nThere are 3-4 weeks of channel inventory for Macs, which is slightly below Apple's target of about 4-5 weeks.\r\n\r\n&amp;lt;strong&amp;gt;Apple's Apple TV and iPhone businesses&amp;lt;/strong&amp;gt;\r\n\r\nApple sold 717,000 iPhones during the quarter and earned about $419M from these and related products over the quarter; it should be noted that Apple's iPhone revenue is deferred over the course of 24 months for each sale.\r\n\r\niPhone 3G revenues are deferred over 24 months, as with the original model.\r\n\r\nCustomer reactions to the phone have been \"overwhelmingly positive.\"\r\n\r\nOver 25 million apps have been downloaded from the App Store in 10 days; about 90 percent of these are $10 or less.\r\n\r\nMore than 900 apps are available.\r\n\r\nThe App Store isn't a profit generator and, like iTunes, is there more to boost iPhone and iPod sales.\r\n\r\nApple TV remains a \"hobby,\" as it's not a very large business.  However, Apple plans to continue investing in the media hub as the company is still \"excited\" about it.\r\n\r\nApple is \"very confident\" with its iPhone 3G production ramp; it can't predict when there will be a balance, but does believe it will have enough supply for additional launches.\r\n\r\nThis ramp is directly on schedule and isn't believed to be affected by technical issues, even with \"staggering\" demand.  It's difficult to predict this level of demand for a new product with a very different price point than its ancestor.\r\n\r\n&amp;lt;span class=\"red\"&amp;gt;The company will launch iPhone 3G in 20 additional countries on August 22nd, bringing the total to over 40.  The remaining 30 will be ready before the end of the calendar year.&amp;lt;/span&amp;gt;\r\n\r\nOppenheimer and the company see customers shifting more towards smartphones in the future than simple voice-oriented phones.\r\n\r\n&amp;lt;strong&amp;gt;Apple's Retail business&amp;lt;/strong&amp;gt;\r\n\r\nApple's retail stores combined to sell 476,000 Mac units and generate $1.445B in revenues during Apple's fourth fiscal quarter, marking yearly growth of 44 percent in units and 58 percent in revenue. Sequentially, retail sales were responsible for a 3 percent growth in units but were exactly flat in revenue.\r\n\r\nAn estimated 32 million customers passed through Apple retail stores, an increase of 10M year-over-year.\r\n\r\nOver half of all retail Macs are sold to new customers.\r\n\r\nThere were 598,000 personal training sessions during the quarter.\r\n\r\nApple opened 8 stores during the quarter, with a total of 216 in operation.  With roughly 211 stores open, an average store's revenue was $6.8M compared to $5.1M a year ago -- an increase of exactly one third.\r\n\r\nThere will be 242 Apple stores by the end of fiscal 2008, including new stores opening in Germany and Switzerland in the new quarter.\r\n\r\nThe Beijing, China store opening this past weekend made Apple \"very happy\" with its initial results.\r\n\r\nAbout 170 Best Buy stores were added during the quarter to Apple's third-party offerings, with a total of 570.  Apple expects to be at about 600 by the end of the summer.\r\n\r\nThere are 10,300 storefronts carrying Macs, up by 1,600 year-over-year.\r\n\r\nSome of the earliest stores are being remodeled.\r\n\r\n&amp;lt;strong&amp;gt;Apple's iPod and iTunes businesses&amp;lt;/strong&amp;gt;\r\n\r\nAbout 11,011,000 iPods were shipped this quarter, with the media players generating $1.678B in revenue.  The unit shipments climbed 12 percent year-over-year while revenues rose by 7 percent.  Sequential results were more mixed, with shipments going up by 3 percent but actual revenue falling 8 percent.\r\n\r\niPod sales were primarily driven by the iPod shuffle and iPod touch.\r\n\r\nThe company holds over 70 percent of the player market share in the US and Australia, over 60 percent in Canada, and over 50 percent in Japan, Switzerland, and the UK.  It has \"strong\" double-digit share elsewhere.\r\n\r\nThere are four to six weeks of iPod channel inventory at the end of the quarter.\r\n\r\n&amp;lt;span class=\"red\"&amp;gt;iTunes now offers 8 million songs, 20,000 TV shows, and 2,200 movies, with 450 of those movies offered in HD.&amp;lt;/span&amp;gt;\r\n\r\niTunes contributed significantly to the quarter's results, but also contributed to \"elasticity\" in pricing.\r\n\r\nThe iPod touch back-to-school promo is affecting Apple's stocks.\r\n\r\nApple's US iPod sales grew about 10 percent, while international sales grew about 15 percent; the company doesn't otherwise break out its iPod sales by region.\r\n\r\n&amp;lt;strong&amp;gt;The financial side of Q3&amp;lt;/strong&amp;gt;\r\n\r\nGross margin hit 34.8 percent, down from 36.9 percent a year before but significantly above guidance of 33 percent.\r\n\r\nThis came largely on the back of a better commodity environment and product mix.\r\n\r\nThe tax rate was lower than expected at 29 percent versus 31 percent guidance, largely due to a better mix of foreign profits.\r\n\r\nInternational sales accounted for about 42 percent of all quarterly revenue.\r\n\r\n&amp;lt;strong&amp;gt;Apple's next fiscal quarter (Q408)&amp;lt;/strong&amp;gt;\r\n\r\nApple is targeting $7.8B in revenue and earnings per share of exactly $1.\r\n\r\n&amp;lt;span class=\"red\"&amp;gt;There is a secret \"product transition\" that will affect Apple's product margins and drop them to about 30 percent, but which CFO Peter Oppenheimer can't talk about today.  Whether this applies to the Mac, iPod, or another category is unclear.&amp;lt;/span&amp;gt;\r\n\r\n&amp;lt;span class=\"red\"&amp;gt;Regarding the mystery transition, Apple doesn't want to leave a margin so high that it creates an \"umbrella\" for competitors to rest under in terms of price; it often releases products at a high price but lowers their costs later.&amp;lt;/span&amp;gt;\r\n\r\nThese state-of-the-art products will have technologies and features that others \"can't match,\" Oppenheimer says.\r\n\r\nGross margins should be about 31.5 percent in the September quarter as a result of this, with these ultimately dropping to 30 percent by fiscal 2009.\r\n\r\nThe company believes commodity pricing for NAND flash memory will be \"favorable,\" while hard drives and optical drives are in a good supply/demand balance along with other components.\r\n\r\n&amp;lt;span class=\"red\"&amp;gt;On Apple chief Steve Jobs' health: \"Steve loves Apple.  He serves at the pleasure of Apple's board.  He has no plans to leave Apple.  Steve's health is a private matter.\"&amp;lt;/span&amp;gt;\r\n\r\nOperational expenses, engineering, and launch expenses can't be deferred, but they're factored into the quarterly guidance.\r\n\r\nThe company has considered the US economic downturn for its guidance.\r\n\r\nApple is \"very confident\" it will hit the 10 million iPhone mark for 2008 that it set last year."^^<http://www.w3.org/2001/XMLSchema#string>
<http://appleinsider.com/article/?id=4387>